Unemployment climbs with recession, oil downturn

Published 7:00 pm, Friday, July 17, 2009

Unemployment continued to climb in the Permian Basin as both the national recession and the downturn in oil and gas activity continued to take hold in the region.

The Texas Workforce Commission reported Friday that the Midland metropolitan statistical area had an unemployment rate of 6.1 percent in June, up from 5.2 percent in May and 3.2 percent last June. The Odessa metropolitan statistical area saw its unemployment rate jump to 9.1 percent from 7.8 percent in May and 3.8 in June 2008. For the Permian Basin, the unemployment rate is 8 percent, up from 6.9 percent in May and 3.8 percent last year. Among the commission's 26 metropolitan statistical areas, Midland ranked third behind Amarillo at 5.7 percent and Lubbock with 6 percent.

Until April figures were released, Midland had reported the lowest unemployment in the state for over 50 months, beginning in January 2005. Robert Crawley, labor market analyst with the commission in Austin, said it would take a significant event to cause a shift in the rankings. Noting the 500 jobs lost in the mining, logging and construction sector - which includes oil and gas operations - from June 2008 to June 2009, he said "The weakness in the labor market, especially mining, logging and construction from the time Midland was the lowest-ranked and now caused Midland to rise in the rankings. That's an example of a significant event. And Midland had the lowest unemployment for so long because of its oil and gas activity, which is not present in most other parts of the state."

He added, "It's hard to measure whether there are any other factors. The summer trend is so strong it overshadows anything else." That summer trend is a rise in unemployment that begins showing up with June figures as schools release staff and students join the ranks of job seekers with school out of session for the summer, he said. He added that rates should decline at the end of summer as staff and students return to school.

"We see a trend where we haven't bottomed out quite yet," he said, noting that "We're just falling into this recession - the rest of the country has been in it about 18 months."

He said he doesn't see Midland reaching 8 or 9 percent employment, but Odessa could reach double digits because of the ties to the oil industry. "This tells me we need to diversify. Mining, logging and construction is still 23 percent of Midland's industrial sectors. We need to look at those areas and diversify."

Crude prices are at healthy levels around $60 a barrel now, he said, but he believes they will have to reach $75 or $80 a barrel and stabilize before oil field workers will be put back to work.

"I see this as a jobless recovery. Things are looking up, but the job market is not coming back" and may not until at least next year, he said. "If you get a job offer, don't turn it down."

One sector that could offer employment is leisure and hospitality, which added 100 jobs from May to June. Karen Hopkins with Bobby Cox Companies, which operates the Rosa's Cafe, Taco Villa and Texas Burger restaurants in Midland-Odessa, said the employment crunch that the industry had suffered the last couple of years appears to be easing.

"We're seeing more people available for our workforce," she said. "We're able to be more selective in our hiring."

Bobby Cox soon will expand its workforce, she said. The company is building a new Rosa's Cafe on Andrews Highway twice the size of the location it is replacing, which will mean more jobs. The company also plans a second Texas Burger on Loop 250 near Wadley Avenue and is in the beginning stages of building a new Taco Villa on Andrews Highway between Walgreens and the Heart Center to replace the Taco Villa at Andrews Highway and Illinois, where CVS plans to build a new pharmacy. The new Taco Villa will be bigger and require more staff, she said. And, Hopkins said, the company always keeps applications on file for its existing restaurants.

"We feel comfortable with the economy and that we're able to hire staff," she said.

Statewide, the unemployment rate rose to 7.5 percent from 7.1 percent in May, the highest since January 1993. The commission reported that the state lost 40,600 jobs during the month.

While Amarillo reported the lowest unemployment, the highest was in McAllen-Edinburg-Mission, 11.1 percent.